Thousands of owners of holiday homes are about to lose a major tax benefit as a result of changes that come into force on Wednesday.

Until now, those letting holiday accommodation were allowed to offset the cost of repairs, furniture and fittings against capital gains tax when they sold up and, more importantly, used losses they incurred on that home's "business" to lower their annual income tax bill.

It is thought about 65,000 UK families currently benefit from the "furnished holiday lettings" (FHL) rules, costing the Treasury millions. The rules apply to holiday lets in the UK and anywhere in Europe – defined as the European Economic Area.

Owners were allowed to deduct expenses such as mortgage interest, cleaning, agent commission, utilities, business rates, insurance and any improvements and furnishings from their rental income.

For example, if your annual rental income is £10,000 but your total expenses £15,000, and you made repairs totalling £5,000, your loss for the year would be £10,000.

In the past you were able to offset that loss against your other income. But not any more. The relief made particular sense for higher-rate taxpayers, who were saving considerable sums, particularly if they "worked" the relief.

Many over-60s bought homes both here and on the European mainland on the basis that the outgoing relief would be there for years to come.

Experts are predicting the removal of the tax break, added to low rental returns, particularly in Europe, could result in many second home-owners selling up.

From 6 April it will be possible to offset losses from a holiday lettings business only against certain income from that individual business. Stephen Barratt at accountant James Cowper says: "The impact of the proposed changes will be severe for many people ... In the case of most second homes which are let as furnished holiday lets, this will mean there is no tax relief.

"The cost of maintaining those properties will therefore go up significantly, making them less affordable. This is potentially serious for many owners whose incomes are already stretched."

He warns that further changes are on the way which will make holiday lets even less attractive from next year.

"The present minimum requirements for letting the property are that it must be let for 70 days a year and be available for letting for 140 days a year.

"These minimum requirements are set to increase, with effect from April 2012, to 105 and 210 days respectively," he says.

A spokesman for property tax legislation specialists Hedge Tax Mitigation says owners should seek professional advice if they are in any doubt as to how the changes will affect them.